PCP 18 plate car, thoughts?

[Networkgeek]

Hi all

I desperately want to get back into a BMW, I'm currently daily driving a Cup pack Renault Clio RS200. It's a great car on track, but I hate daily driving it.

The only car I want is a BMW M2 OG. I've found a car, but I haven't made contact with the dealer first as I want to sort finances beforehand.

The car is up for 35k at a local BMW dealer. I don't have 35k sat in my bank (recently bought another house), so the options I'm looking at are -

Bank loan for 30k, 5k deposit from me
PCP for 4 years

I've never taken a PCP out on an older car, as the rates are always high and I've never fancied having a PCP finance deal on a car outside of warranty. But, are there any circumstances where this could be a good idea?

I'm just trying to cover all eventualities, so I don't sting myself with a PCP and get stuck with a car.

Thanks
NG

Edited by Networkgeek on Tuesday 15th February 14:45

[anonymous-user]

The only benefit PCP will give you in the current market is that used values are inflated due to new car shortages, so it will give you certainty about what would happen at the end of the two years you tend to keep the car and will protect you from negative equity.

In almost every other regard, it will almost certainly be much more expensive and restrictive than a bank loan.

[Dimebars]

PCP is designed to work when you take it to full term. It can be painful to get out early (unless the current market continues for 4 years).

It does give you absolute certainty as to what someone (the finance co) is prepared to pay for the car in 4 years though, assuming that it's kept in good condition and within the agreed mileage.

Usually, the advice would be take the PCP if the dealer is offering a deposit contribution or similar, then pay off with a bank loan at a cheaper rate. Not sure that many dealers are offering contributions/freebies in the current climate though. It's very much the price is the price just now.

If it were me, and the £30k loan payments can be seen as affordable, I'd favour that over PCP (from someone that has PCP'd for ages)

[ilikejam]

If you're looking at some kind of 'private' PCP with a bank or something then it's probably going to sting.

Would be worth enquiring about any incentives the dealer has on PCP - might be nothing, but there might be a deposit contribution or service pack or something.

You could then potentially take the PCP, but phone up within the 14 day cooling off period and pay it off with an HP loan at a better interest rate and keep the incentives.

[Al U]

Networkgeek said:

Hi all
The car is up for 35k at a local BMW dealer.

I've never taken a PCP out on an older car, as the rates are always high and I've never fancied having a PCP finance deal on a car outside of warranty.

Edited by Networkgeek on Tuesday 15th February 14:45

Bear in mind that if it is a BMW dealer you would be buying an approved used car, so you'll get a fairly comprehensive 12 month warranty and breakdown cover included. At the end of the 12 months they will send you a quote to continue the same cover but at your own cost.

[omniflow]

I think you're probably over complicating this.

Taking out a PCP provides you with 2 things:

1. Lower monthly payments (probably)
2. A guaranteed minimum price for the car at the end of the term

That's it.

The total cost of acquiring the car is something that you can work out, compare with the total cost of financing it via other methods, and then seeing if you think it's a good idea based on the 2 points above and the comparative total cost.

Assuming you're going to acquire the car anyway, then the whole PCP on a car outside of warranty thing is a total red herring. If you buy it on HP or with a bank loan, it's still got no warranty.

[LightningBlue]

Only you can know your financial circumstances but £30,000 on a car loan seems huge to me. I’d be wanting to put a fair bit more capital in than the £5000 if you go down the loan/hp route

[Sunnyv5]

If you are buying from BMW Approved used either on PCP or HP they won’t move on their interest rate but they do give discounts. They call it “dealer contribution” and I always ask what they can do and if deal is good I can do a deal now.

Re the m2, you can now get m2 comps for £40k (maybe dealer contribution so can get it lower).

[N88]

I’ve just been through this on a similar value car and I financed the balance through a personal loan for the simple reason that it was at 2.8% rather than Mercedes 9.2% that they would not budge on.

The only reason I can see that people go for PCP is the lower monthly payments, but there is no doubt that the overall cost is much lower if you can go down the personal loan route.

The whole thing is under your control and if you’re putting down a reasonable deposit it’s unlikely you’ll ever end up in negative equity.